Disrupting Terrorist Financing with Civil Litigation
Smith, Jack D., Cooper, Gregory J., Case Western Reserve Journal of International Law
While the direct costs of mounting individual terrorist attacks are relatively low, maintaining a terrorist network is an expensive undertaking. To promote a veil of legitimacy, large terrorist organizations must spend tens of millions on propaganda and ostensibly legitimate social or charitable activities such as hospitals, schools and other pubic works. They raise the money largely through fundraising efforts worldwide, including "witting and unwitting" contributions from mosques, non-governmental organizations, wealthy donors, and charitable foundations. Criminal prosecutions alone have not stopped such contributions because of insufficient prosecutorial resources and the high standards of proof required for criminal convictions. Unleashing legions of private attorneys to pursue civil actions against individuals and organizations, including charities and banks, involved in the chain of terrorist financing may be a much more credible deterrence, especially when combined with the triple damages provisions of 18 U.S.C. 2333 (a).
The international community has taken numerous steps to thwart terrorism in the wake of the September 11, 2001 attacks in New York City and Washington, D.C. Most of these can be grouped under the four principles laid out in the Counter-Terrorism Strategy adopted by the European Union in 2005: "Prevent, Protect, Pursue, and Respond." (1) But perhaps the one that will prove most effective for suppressing terrorism over the long term is the severing of funding and support networks, which the European Union categorizes under the "Pursue" principle.
As recently stated by the Financial Action Task Force (FATF), "[d]isrupting funding flows creates a hostile environment for terrorism, constraining the overall capabilities of terrorists and helping frustrate their ability to execute attacks." (2) Governments invariably turn first to their criminal procedures to attack terrorist financial networks. However, our research and experience indicates that civil procedures may often be an even more effective tool to stop the financing of terrorism.
Part I of this article describes the vital importance of donations from sympathizers to large terrorist organizations and posits that the best way to dry up those funds is to freeze and confiscate the wealth of people who finance murder and terror. Part II describes some of the historical difficulties in recovering the assets of crime and corruption hidden overseas, and explains how the situation has improved since 2005 when the United Nations Convention against Corruption came into effect. Part III discusses the power, scope and legal issues surrounding 18 U.S.C. 2333(a), a 1992 statute that provides a civil remedy to victims of terrorism to recover damages from terrorists and those that provide them material support. Part IV discusses recent section 2333(a) filings against banks and private companies, as well as other civil court remedies useful in the fight against terrorist organizations. Our conclusion is that widening avenues for private attorneys to seek damages in the civil courts may prove to be the most effective weapon of all against the spread of terrorism.
I. WHY PURSUE ASSETS?
Terrorist organizations do not need a lot of money to build bombs. The 2002 Bali Bombings by Jemaah Islamiya cost approximately $50,000, and the 2004 Madrid attacks by an Al Qaeda inspired terrorist cell cost approximately $10,000. (3) Trying to detect and thwart transfers of such small amounts is generally a fruitless exercise. Gary M. Osen, a New Jersey attorney who is leading a series of high profile terrorist financing actions against banks, aptly compares it with "trying to shut down the phone company by going to people's homes and apartments and individually smashing their phones instead of destroying the satellites and cables that conduct the signals." (4)
The Financial Action Task Force (FATF) is an inter-governmental body composed of thirty-two countries and two regional organizations. …